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Set up a company in the UK or in EU?

Need advice on how to set up a LTD company in the best way from a tax standpoint.

Hi there, I'm a UK citizen living in Hungary and my wife is a Vietnamese citizen. We want to set up a company which will import certain products from Vietnam to be sold on Amazon UK and other online sales channels. What I am wondering is how this might best be done. Can I set up a LTD company in the UK from Hungary with two directors (my wife and I) and then just pay any taxes for the company to HMRC? We are thinking about seeing if the company works for a while and possibly moving to the UK if it becomes successful to grow the business further.

Questions

  1. Do we need employment contracts to take a salary and how would this work if we lived abroad?
  2. Can we open the business with no employment or salary arrangements and pay a salary later? i.e does a salary have to be paid monthly?

The last question is would it just be easier all round if we lived in the UK from a tax point of view?

I don't really think taking the salary abroad would be tax efficient or easy to set up in Hungary but it would in the UK.

If anyone is going to advise us that we seek professional advice would they also be able to recommend an accountancy firm that's not too pricey for this, please? 

Thanks,

Brian

 

Replies

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20th Dec 2018 16:28

brian1racing wrote:

If anyone is going to advise us that we seek professional advice would they also be able to recommend an accountancy firm that's not too pricey for this, please?  

https://www.icaew.com/about-icaew/find-a-chartered-accountant

A 'cheap' accountant is likely to be a false economy although price is a subjective matter.

Having 3 different jurisdictions to contend with will, inevitably, make matters more complicated than 1.

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20th Dec 2018 16:35

Don't be asking this on an internet forum.

Too complicated.

Crazy idea. ©

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20th Dec 2018 16:39

There are a huge number of considerations to take in to account here and you need to find a specialist who's able to consult with you in detail if you want to find the best setup for your business. You will not be able to do this yourself or via internet advice.

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By Matrix
20th Dec 2018 17:43

I would start with local advice in Hungary. You will need a UK accountant to register for VAT but you would be complicating your taxes and incur unnecessary professional fees if you form a UK company managed offshore.

However if you start selling on Amazon as an overseas seller then become a UK seller it may get complicated, not only the tax/VAT but setting up the Amazon account properly. I have just registered an overseas seller for VAT and am inadvertently becoming an expert on global sales taxes. It is hard for sellers to work it all out.

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20th Dec 2018 19:44

Thanks for all the replies, just to be clear the goods would go straight from Vietnam to a UK port and then straight to an Amazon FBA centre, they would not go via Hungary.

If I set the LTD company up in the UK would it really be so complicated?

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By Matrix
to brian1racing
20th Dec 2018 20:43

You asked whether it would be possible to set up a UK company with two Directors who run it from Hungary but pay taxes to HMRC. The answer is No.

You also said that taking the salary abroad (or in fact where you are living and working) would not be tax efficient or easy to set up. Maybe not, but running a business and receiving income in Hungary will give Hungary first taxing rights so you need to start there for advice.

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to brian1racing
20th Dec 2018 21:30

brian1racing wrote:

If I set the LTD company up in the UK would it really be so complicated?

Yes - and that's before we leave the EU.

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21st Dec 2018 10:26

And this before you ask the question will a No Deal Brexit effect the situation

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21st Dec 2018 11:20

"Can I set up a LTD company in the UK from Hungary with two directors (my wife and I) and then just pay any taxes for the company to HMRC?"

You can as HMRC are not going to complain but that will leave you exposed as tax is payable in Hungry as well. Not technically correct to pay taxes in UK without a permanent establishment Potentially you could end up paying tax in two countries and not able to get double tax relief in Hungary.

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21st Dec 2018 12:50

Thanks for that reply, I was confused by previous answers as I had read that you don't have to be in the country to be a director or even be a UK resident/citizen.

Are you then saying that corporation tax might potentially have to be paid to both Hungary and the UK? If so wouldn't a DTA prevent this? Corporation tax is 19% in the UK and 9% in Hungary.

I presume VAT would be UK only as all sales would be within the UK.

That just leaves income tax on any salaries, this for me is the most confusing part.

I took a look at the DTA between Hungary and the UK but its gobbledegook to me.

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By Matrix
to brian1racing
21st Dec 2018 12:57

I don't really see what is confusing about advising you that Hungary would tax the profits first (see the permanent establishment article in the treaty). So if your company pays UK tax then this may be incorrect and also result in double taxation.

You can be a Director but if you manage and control the company in Hungary then you will likely create a permanent establishment there.

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to brian1racing
21st Dec 2018 14:02

brian1racing wrote:

Thanks for that reply, I was confused by previous answers as I had read that you don't have to be in the country to be a director or even be a UK resident/citizen.

You read correctly.

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21st Dec 2018 14:03

Dear Brian,

All you need for Christmas is an accountant.

But don't bother ringing one today, they will either be down the pub or sweating over last minute self assessment returns.

Dont be my client who ran a UK company whilst living in the EU, and didn't get local advice...............he ended up paying tax on all the income in the EU country, and 3 years later, still hasnt got it back from the UK, and I don't think he will despite his engaging some high powered accountants to deal with it.

Personally I'd wait until we know how much economic self harm the UK is going to cause itself before doing anything. Ie if we are just chopping off a few fingers and hoping they grow back nicer fingers or lopping off both legs and will be bleeding in a puddle for years.

Regards

An Accountant

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21st Dec 2018 17:15

Yes thats the danger that Hungry don't allow double tax relief as tax shouldn't have been paid in the UK in the first place and then the UK refuse or its outside the 4 year time limit.

There are plenty of companies that operate how you you wish to operate and they take the risk as the odds of your the home country tax authorities finding out is on par of Manchester United winning the league.

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